Newcastle Permanent Superannuation Plan

Transcription

1 Newcastle Permanent Superannuation Plan Superannuation Division Member Information Booklet 27 November 2017 The information in this Member Information Booklet forms part of the Product Disclosure Statement (PDS) for the Superannuation Division of the Newcastle Permanent Superannuation Plan dated 27 November This Member Information Booklet is only applicable to members of the Superannuation Division of the Newcastle Permanent Superannuation Plan ABN (the Plan) and is issued by Mercer Superannuation (Australia) Limited (MSAL) ABN , Australian Financial Services Licence as trustee of the Plan. RSE Licence L The Plan s administrator is Mercer Outsourcing (Australia) Pty Ltd ABN , Australian Financial Services Licence The Plan is distributed by Newcastle Permanent Building Society (NPBS) ACN , Australian Financial Services Licence/Australian Credit Licence The Newcastle Permanent logo is a registered trademark of NPBS.

2 CONTENTS About This Booklet 2 How To Contact Us 3 How Your Super Works 4 Paying Your Benefits 7 Investments 9 Understanding Investment Risk 17 Investment Options In Detail 21 Fees And Costs 29 How Super Is Taxed 40 Insurance In Your Super 42 Member Communication And Privacy 47 Other Things You Should Know 48 Enquiries And Complaints 50 Cooling Off 50 NEWCASTLE PERMANENT SUPERANNUATON PLAN SUPERANNUATION DIVISION 1

3 ABOUT THIS BOOKLET This Member Information Booklet (Booklet) provides important information about the Superannuation Division in the Newcastle Permanent Superannuation Plan (the Plan) and forms part of the Product Disclosure Statement for the Superannuation Division of the Newcastle Permanent Superannuation Plan dated 27 November 2017 (PDS). You should consider the important information in this Booklet and the PDS before making any decision about your super. This Booklet contains general information only and does not take into account your individual objectives, financial situation or needs. Before acting on this information, you should consider whether it is appropriate to your objectives, financial situation and needs. You should get financial advice tailored to your personal circumstances. Mercer Superannuation (Australia) Limited ABN (MSAL) is the trustee of the Plan. In this Booklet, MSAL is called trustee, we or us. The trustee has appointed a number of service providers to assist in the day to day operations of the Plan or to provide services to members of the Plan. The following service providers are named in this Booklet and have consented to being so named: the Plan s administrator, Mercer Outsourcing (Australia) Pty Ltd ABN AFSL (MOAPL), the Plan s investment managers, Mercer Investments (Australia) Limited ABN AFSL (MIAL) and Newcastle Permanent Building Society Limited ABN AFSL (NPBS), the Plan s distributor and provider of personal advice to members, NPBS. the Plan s insurer, TAL Life Limited ABN , AFSL (TAL). MSAL, MOAPL and MIAL are wholly owned subsidiaries of Mercer (Australia) Pty Ltd (Mercer) ABN MSAL is responsible for the contents of this Booklet and is the issuer of this Booklet. MOAPL, MIAL, NPBS or TAL are not responsible for the issue of, or any statements in this Booklet or the PDS. They do not make any recommendation or provide any opinion regarding the Plan or an investment in it. The value of the investments in the Plan may rise and fall from time to time. MSAL, MOAPL, MIAL, Mercer, TAL or NPBS (except as detailed in the How We Invest Your Super section of this Booklet in relation to the Cash and Term Deposit investment options) do not guarantee the investment performance, earnings, or return of any capital invested in the Plan. Insurance benefits are provided by the Plan s insurer and not MSAL, MOAPL, MIAL, NPBS or Mercer. Details of the insurance cover available in the Plan are set out later in this Booklet. Updated information The information in this Booklet and the PDS may change. You can obtain updated information that is not materially adverse at newcastlepermanent.superfacts.com or by calling the Helpline to request a copy of the information free of charge. Changes which are materially adverse will be advised to you as required by law NEWCASTLE PERMANENT SUPERANNUATON PLAN SUPERANNUATION DIVISION 2

4 HOW TO CONTACT US Trustee Mercer Superannuation (Australia) Limited ABN GPO Box 4303 Melbourne VIC 3001 Tel: Helpline Call the Helpline on from 8am to 7pm AEST Monday to Friday. Website newcastlepermanent.superfacts.com After you join the Plan, we will send you your personal login. You will then be able to access your details about your super account and other relevant information including annual reports and member newsletters. Generally newcastlepermanent.superfacts.com is available 24 hours per day, seven days per week. Please note, however, that the website may not be available when we need to carry out scheduled updates or maintenance. Keep your contact details up to date We can only send you information if we have your current contact details. You can update your details via our website newcastlepermanent.superfacts.com (sign in using your personal login) or call the Helpline. We may send member communications to you (including member statements and significant event notices that the law permits) via: (where we have an address for you including any address provided by you or any other person on your behalf including your employer), and/or SMS (where we have a mobile number provided by you), and/or a link to a website so you can download them. We can also post any documents to you. When you receive your personal login details, simply update your communication preferences online under Personal Details or call the Helpline. Call the Helpline if you need more information about accessing the website. Postal address Newcastle Permanent Superannuation Plan GPO Box 4303 Melbourne VIC 3001 Help in making decisions You should get advice from a licensed, or appropriately authorised, financial adviser. There are helpful tools and further information at newcastlepermanent.superfacts.com including: up to date information on investment options, and financial planning tools. NEWCASTLE PERMANENT SUPERANNUATON PLAN SUPERANNUATION DIVISION 3

5 HOW YOUR SUPER WORKS This section provides information regarding contributions, rollovers and minimum account balance requirements. You have accumulation style super. Your super account balance is made up of: amounts contributed to your account by you, your spouse or your employer plus any money you transfer in from other super funds less taxes and surcharges, fees, expenses, insurance premiums and amounts paid out to or for you plus investment earnings (which can be positive or negative). plus any insurance amount (if applicable, refer to the Insurance in Your Super section later in this Booklet for details) Your member statement explains how your super has performed throughout the previous year. CONTRIBUTIONS To join the Plan you must: 1. Complete the Application For Membership Of The Superannuation Division form (application form) and forward it to the address noted on the form, and 2. Make an initial investment or start a regular contribution plan, as detailed below. Remember, some contributions cannot be accepted until we receive your tax file number. Initial investment To make an initial investment complete item number (1) under Step 2 on the application form. Your initial investment must be at least $1,200* and can be made in one of the following two ways: 1. As a rollover from another superannuation fund. Complete a Rollover form and forward it to your previous super provider, or 2. As a lump sum amount of at least $1,200*. Attach a cheque made payable to Newcastle Permanent Superannuation Plan to your application form. * If you choose to invest only in the Cash option, a lower initial amount may be negotiated with NPBS. Regular contribution plan You, your spouse or your employer can start a regular contribution plan. This requires a minimum regular contribution of $100 per month or $300 per quarter (unless a lower regular contribution has been negotiated with NPBS before you join the Plan). If you, your spouse or your employer start a regular contribution plan, you do not need to make an initial investment to the Plan. By contributing on your behalf, your employer can satisfy their Superannuation Guarantee obligations. To start a regular contribution plan: tick the box under item number (2) in Step 2 of the application form, and you, your spouse and/or your employer (as applicable) must complete a Starting a regular contribution plan form. The regular contribution will be automatically withdrawn from the nominated bank, credit union, building society or cash management trust account via direct debit. Deductions will occur on the 10 th or 20 th day of the month, as per your instructions on the form. If the applicable date is a weekend or bank holiday, the deduction will occur on the following business day. Monthly deductions occur each month. Quarterly deductions occur each March, June, September and December. You, your spouse or your employer (as applicable) may change the amount, date or frequency of the regular contributions at any time by completing a Starting a regular contribution plan form. All forms are available at newcastlepermanent.superfacts.com or by calling the Helpline on Lump sum contributions You, your spouse or your employer can make a lump sum contribution to the Plan at any time. To make a lump sum contribution: Use the BPAY facility (see below for details), or Complete the relevant Making contributions form, available at newcastlepermanent.superfacts.com or by calling the Helpline, and return it to the address noted on the form together with a cheque payable to Newcastle Permanent Superannuation Plan, or Visit your local NPBS branch, or call NPBS on , to arrange an over-the-counter or EFT deposit Contributions via BPAY You can make after tax contributions via BPAY. To do so, sign in to the Plan website using your personal login. You can then obtain your BPAY Biller Code and Personal Reference Number. Or call the Helpline for details. Registered to BPAY Pty Ltd ABN NEWCASTLE PERMANENT SUPERANNUATON PLAN SUPERANNUATION DIVISION 4

6 MINIMUM ACCOUNT BALANCE The trustee requires that your super account balance remains above $1,200 at all times, unless you, your spouse or your employer is participating in a regular contribution plan. To check your account balance at any time, sign-in to the Plan website using your personal login or call the Helpline. If your super account balance falls below $1,200 and there is no regular contribution plan in place, your super may be transferred to the SuperTrace Eligible Rollover Fund (SuperTrace) and any insurance cover you had in the Plan will cease* (see About the Plan s Eligible Rollover Fund in the Other things you should know section for more information). You will be advised if this applies to you. You can make further contributions, commence a regular contribution plan or provide instructions for the payment of your super to another approved superannuation arrangement within 30 days of being requested. If you, your spouse or your employer are participating in a regular contribution plan, and your super account balance becomes insufficient to meet your monthly insurance premium, any insurance cover you have in the Plan may cease. You will be advised if this applies to you. You can make further contributions or appropriately increase the regular contribution plan within 30 days of being requested, otherwise your insurance cover will cease 30 days after the end of the month in which your super account balance became insufficient to meet the monthly insurance premium. See the Insurance in your super section for more information. *You may be entitled to extended death cover and eligible to apply to continue your death cover outside the Plan (see the Insurance in your super section for more information. CONSOLIDATING YOUR SUPER ACCOUNTS You may rollover super money from other funds into the Plan. This could improve your super investment overall as you ll only be paying one set of fees and handling one set of paperwork. You should discuss the benefits of rollovers with a licensed, or appropriately authorised, financial adviser. To obtain the relevant form go to newcastlepermanent.superfacts.com or call the Helpline. Generally, there s no charge for receiving money rolled in from other funds, although you should check with your other funds to see if there are any withdrawal or exit fees. You should also consider the impact that leaving a fund may have on any insurance cover you have, including the amount and cost of cover. If you roll in preserved money, it stays preserved in the Plan. CONTRIBUTION SPLITTING Contribution splitting allows members to split their super contributions with their eligible spouse (see below) and transfer the eligible contributions to an account in the name of their eligible spouse in a complying superannuation fund. An eligible spouse must not have permanently retired (if past their preservation age) or reached age 65 and includes: your husband or wife another person (whether of the same sex or not) with whom you are in a registered relationship, or another person who, although not legally married to you, lives with you on a genuine domestic basis in a relationship as a couple. You will generally be able to request a contribution split of up to 85% of concessional contributions as long as you maintain a super account balance of at least $5,000. Any contributions that you split will continue to be counted towards your concessional contribution limit. Contributions that cannot be split You cannot split: contributions over the concessional contribution limit, untaxed contributions including member contributions (but excluding contributions for which you have advised the trustee that you are claiming a tax deduction or salary sacrifice contributions), eligible spouse contributions and amounts contributed by the Government amounts rolled over or transferred into the Plan lump sum payments from an overseas super fund contributions that legislation restricts or prohibits splitting. You will be advised when you request a split if this applies to you. When you can split contributions You can request to split all or part of a previous financial year's contributions i.e. contributions from 1 July to 30 June, once that financial year is over. You have up to 12 months from the end of that financial year to request a contribution split. If you leave the Plan before the 12 months is over, the trustee must receive your request to split contributions on or before the time that your super is paid out, rolled over or transferred to another super fund. You may also be able to split contributions made in the financial year of your super payout. You will need to provide your request to split contributions to the trustee on or before the time that your super is paid out, rolled over or transferred to another super fund. Only one split of contributions for a financial year is permitted. To request a contribution split, you must complete the correct form, which is available on newcastlepermanent.superfacts.com (sign in using your personal login) or by calling the Helpline. We recommend you seek advice from a licensed, or appropriately authorised, financial adviser before making any decision about contribution splitting. NEWCASTLE PERMANENT SUPERANNUATON PLAN SUPERANNUATION DIVISION 5

7 TAX ON CONTRIBUTIONS Tax may be payable on super contributions made by you or on your behalf, or where those contributions exceed certain annual limits. See later in this Booklet for more details about How Super is Taxed. CONTRIBUTION INCENTIVES You may be eligible for the Low Income Superannuation Tax Offset (LISTO). The level of LISTO depends on your income and your total concessional contributions for the financial year. For more information, see the Government Contributions fact sheet available from newcastlepermanent.superfacts.com GOVERNMENT CO-CONTRIBUTION You may be eligible for the Government co-contribution if you make personal after-tax contributions for which you have not claimed a tax deduction to a super fund. The level of Government co-contribution depends on your income and the personal after tax contributions you make during the financial year. For more information see the Government Contributions fact sheet available from newcastlepermanent.superfacts.com. SPOUSE CONTRIBUTIONS A spouse contribution is any after tax contribution made by your Spouse to the Plan in respect of you as an Eligible spouse. Your Spouse should be aware that once a spouse contribution is paid into the Plan it becomes your property and generally cannot be paid back to your Spouse. Your Spouse will need to complete a form prior to making any contributions. Contact the Helpline to obtain the appropriate form. Your Spouse may be eligible to claim a tax offset if they make contributions in respect of you. See later in this Booklet for more details about How Super is Taxed. WHEN THE TRUSTEE CAN T ACCEPT CONTRIBUTIONS The trustee is unable to accept contributions made for or by you: if you have not provided your TFN (unless the contribution has been made by your employer), or if you have not met the work tests as set by the Government (only applicable from age 65, does not apply to Superannuation Guarantee contributions). If you have not met these conditions, any contributions received will be returned to you, or the person or organisation (including where applicable your employer) which contributed. The returned amount will generally not form part of your super account balance. For more details, see the Contributions fact sheet available from newcastlepermanent.superfacts.com. NEWCASTLE PERMANENT SUPERANNUATON PLAN SUPERANNUATION DIVISION 6

8 PAYING YOUR BENEFITS This section explains some of the rules and regulations about the payment of your super benefit. SUPER AND PRESERVATION Government legislation is designed to ensure that you use your super for retirement and restricts the access to your super. There are three super payout categories: unrestricted non-preserved super payouts preserved super payouts, and restricted non-preserved super payouts. The unrestricted non-preserved amount (if any) is the part of your super payout that can be paid in cash at any time. Preserved or restricted non-preserved payouts, which may include insurance proceeds from a Total and Permanent Disablement claim, must be kept in a superannuation fund or other approved superannuation arrangement and can only be accessed according to conditions imposed under superannuation law. Your member statement will provide details about the relevant category for each portion of your super. For more information, see the Accessing Your Super fact sheet available from newcastlepermanent.superfacts.com This fact sheet also includes details about: conditions for accessing preserved or restricted nonpreserved super, and your preservation age (i.e. the age at which your preserved super can be paid to you in cash if you permanently leave work). ACCESSING YOUR SUPER You can choose to take the unrestricted non-preserved component of your super as a cash payment at any time, however tax and an exit fee may be deducted. Call the Helpline if you want to use this option. You may also be able to transfer all or part of your super account balance to another complying superannuation arrangement at any time. If you wish to make a partial transfer this will generally be subject to maintaining a super account balance of at least $1,200 in the Plan. PAYING YOUR SUPER IF YOU LEAVE AUSTRALIA You may be eligible to access your super and have it paid directly to you after you have left Australia as long as: you entered Australia on a temporary visa your temporary visa has expired or been cancelled, and you are not an Australian or New Zealand citizen or an Australian permanent resident. Call the Helpline for more details about: how to make an application to the trustee for the release of your super for the reasons listed above, and what will happen to your super if you make such an application. The trustee may be required to transfer your super to the Australian Taxation Office (ATO) if at least six months has passed since the expiry or cancellation of your temporary visa and you have left Australia and have not claimed your super from the Plan. If this happens, you will need to contact the ATO to claim your super, which will be paid to you subject to the deduction of tax. The ATO will provide the trustee with details of the members who can have their super transferred in these circumstances. Tax rates on super payouts to a temporary resident who has left Australia are higher than those which apply to Australian permanent residents or Australian and New Zealand citizens. Interest (or investment earnings) in respect of super for temporary residents is not paid on amounts paid by the ATO (except in certain limited circumstances). The transfer to the ATO can be required even if you are still employed by your Australian employer. Call the Helpline if your benefit has been transferred to the ATO and you need help to prove to the ATO that you are entitled to that benefit. In most cases, the trustee is required to provide a member with an exit statement when their benefit has been paid out of the Plan. However, the Australian Securities and Investments Commission (ASIC) has provided trustees with relief from this requirement where benefits are paid to the ATO. This relief has been granted because most temporary residents do not advise the trustee of their overseas address details. The trustee intends to rely on this relief. This means that the trustee is not obliged to notify or give an exit statement to a non-resident where a benefit has been transferred to the ATO. NEWCASTLE PERMANENT SUPERANNUATON PLAN SUPERANNUATION DIVISION 7

9 UNCLAIMED MONEY We will consider your payout as unclaimed money and send it to the ATO if: you are over age 65 and we have received no contributions or rollovers in the last two years, and we have been unable to contact you for a period of five years. We may also be required to transfer your account balance to the ATO if: no contributions or rollovers have been received for more than 12 months, and we have not been able to contact you and your account balance is less than $6,000, or if we do not have enough information to properly identify you. You can approach the ATO directly to claim any such money. LOST MEMBERS We may transfer your super to SuperTrace if: we ve written to you twice this mail has been returned unclaimed both times, and you are under age 65. You will no longer be a member of the Plan and any insurance cover you may have had through the Plan will cease if your super is transferred to SuperTrace. See About the Eligible Rollover Fund later in this Booklet for more details. FAMILY LAW Government legislation allows married and de facto* couples (including same sex couples) to make binding agreements or get court orders to determine how each partner s super will be divided if their marriage or relationship breaks down. We may need to adjust your super payout to reflect any agreements or court orders that may be binding on the trustee. We will advise you about any fee for a request related to the Family Law Act in respect of your super payout. Call the Helpline about Family Law matters affecting your super in the Plan. ANTI-MONEY LAUNDERING Under the Anti-Money Laundering and Counter- Terrorism Financing Act 2006 (AMLCTF Act), superannuation funds have to identify, monitor and mitigate the risk that the Plan may be used for the laundering of money or the financing of terrorism. Because of this, you may be required to provide satisfactory proof of your identity to the trustee before you withdraw your benefit. You may also need to provide satisfactory proof of identity to satisfy other legal requirements. At a minimum, you may need to provide the trustee with evidence that verifies your full name, date of birth or residential address. This would usually be in the form of a certified copy of your driver's licence or passport. We may be unable to process your payment request unless we receive this information in appropriate form. Under the AMLCTF Act, we may need to undertake additional identification checks and monitor transactional activity. We may also need to block or suspend transactions. The trustee will not be liable for any loss suffered by you if there is any delay in making a payment that has been caused by or contributed to by the need to comply with the AMLCTF Act or other legislative requirements. By law the trustee is also required to comply with confidential reporting obligations to the AMLCTF Act regulator, Australian Transaction Reports and Analysis Centre (AUSTRAC). Law also gives the Family Court a say in dividing a couple s super if a marriage or relationship breaks down. *Restrictions apply where a de facto relationship has existed for less than two years. Restrictions also apply in respect of de facto couples in Western Australia. Currently the Commonwealth laws about de facto couples do not apply in Western Australia. Under the Family Law Act, the trustee needs to provide certain information about a member s super payout to eligible persons where the information is required to negotiate a superannuation agreement or to help with a court order. An eligible person under the Act includes a member, the spouse of a member or any person who intends to enter into a superannuation agreement with the member. NEWCASTLE PERMANENT SUPERANNUATON PLAN SUPERANNUATION DIVISION 8

10 INVESTMENTS This section provides important information about the Plan s investment options. HOW TO CHOOSE YOUR INVESTMENTS As a new member of the Plan, you can choose your investments by selecting one or more of the available investment options. You must choose one or more investment options in Step 3 of the Application for membership of the Superannuation Division form. If you do not make a valid choice, we won t be able to accept your application for membership. Your chosen investment option(s) will apply to your initial investment and all future contributions (including rollovers in and all other cashflows including fees, insurance premiums and tax) unless you select a different option(s). You should seek advice from a licensed, or appropriately authorised, financial adviser before you choose investment options. It is important to review your investment selection regularly. The trustee may add, remove or alter investment options. We will advise you about any changes. SWITCHING INVESTMENT OPTIONS You can direct your future contributions to a different investment option. You can make this switch online* at newcastlepermanent.superfacts.com (sign in using your personal login) or call the Helpline. If you change or switch options, it s important to specify whether the change or switch will apply to: your current super account balance, your investment strategy for future contributions, or both of the above. See Units and unit pricing for details on which unit price applies when changing or switching investment options. You have a range of investment options available to you. Further information about these investment options follows. * Switches into the Term Deposit investment option cannot be done online. Call the Helpline to obtain the relevant form. SUMMARY OF INVESTMENT OPTIONS The investment options are: Cash-type options The cash type options are designed to provide a very low level of risk over one year or less. The cash type options are: Cash Term Deposit You can only invest in the Term Deposit investment option once your membership in the Plan has been established and your initial investment has been received and invested in your chosen investment option(s) (not including the Term Deposit investment option). See the Term Deposit investment option later in this section for more information on how to invest in this option. Diversified Options The diversified options are designed to combine a mix of two or more complementary asset classes and management styles to deliver a stated objective. Diversified options may be actively managed or largely passively managed. For actively managed options, the trustee chooses and monitors the investment managers and decides how to allocate the different asset classes. Passively managed options (also referred to as indexed options) aim to perform in line with the overall market in which they invest. Enhanced indexed options aim to perform slightly above the overall market by utilising a small actively managed component. The diversified options are: Actively Managed Conservative Moderate Growth Assertive Largely Passively Managed Conservative (Enhanced Indexed) Moderately Conservative (Enhanced Indexed) Moderate Growth (Enhanced Indexed) Diversified Shares (Indexed) Note that the Trustee invests in your chosen option(s) on your behalf. You do not have a direct interest in the option(s) that apply to you. The Trustee holds that interest on your behalf. NEWCASTLE PERMANENT SUPERANNUATON PLAN SUPERANNUATION DIVISION 9

11 NO GUARANTEES There are no guarantees that investment returns will be positive or that you will be able to maintain the value of original capital. Your super account balance will move up and down in value depending on movements in the value of the underlying investments in your chosen investment option(s). You should see a licensed, or appropriately authorised, financial adviser if you are unsure about your investment choice. Low or negative investment returns may affect your super payout. That means that your super payout may be less than the amount of contributions paid into your super account if you leave the Plan within a few years of joining. Tax, fees and charges will also reduce your payout. You can obtain up to date returns for the Plan s investment options at newcastlepermanent.superfacts.com HOW WE INVEST YOUR SUPER No two members are the same. That s why we provide a suite of investment options to help meet your needs. This gives you the flexibility to tailor your investment portfolio or leave it to us to do it for you. Balancing risk and return All investments, including super, carry some risk. We invest your super in your chosen investment options that have different levels of risk depending on the assets that make up each investment option. Historically, growth investments, such as shares and property have the potential to produce higher returns over the long term but are also likely to experience more volatility (ups and downs) in investment returns in the short term. Defensive investments such as cash or fixed interest (including higher yielding fixed interest), tend to produce lower but more stable long-term investment returns than growth investments. Investment returns are not guaranteed and you may lose some of the money you have invested. You can help to balance risk and expected return by choosing investments across different asset classes, countries and investment managers through your choice of investment options. Your super can be invested in various asset classes shown in the table below (through the available investment options). Asset class Australian shares International shares Property and infrastructure Alternative assets Higher yielding fixed interest Description Investments in Australian companies listed on the Australian stock exchange (ASX) or equity based trusts, derivatives or unlisted Australian based equity type investments. It may include a small exposure to companies listed outside the Australian exchange. Investments in companies listed on securities exchanges around the world. These investments may be hedged* or unhedged to manage movements in exchange rates, which can have an impact on the value of investments (up or down). Investments in international shares may be in developed markets, which may include countries that are among the most developed in terms of economy and capital markets. Alternatively, investments in international shares may be in emerging markets, which would include countries that typically have a lower standard of living and less developed infrastructure and financial markets. Australian and international listed and unlisted property funds including (but not limited to) office buildings, shopping centres, industrial estates and other similar property investments. Infrastructure investments are investments in long-term assets required for major economic and social needs such as airports, tunnels, bridges, toll roads, pipelines and utilities. Investments in infrastructure assets can be in Australia or internationally through listed or unlisted assets. Alternative assets comprise investments that do not fit within other asset classes. They may include investments in hedge funds, private equity, natural resources, mezzanine debt and insurance linked strategies. Alternative investments may have growth or defensive characteristics. Targets a higher yield from fixed interest by investing in issuers that carry a higher degree of credit risk or illiquidity relative to defensive fixed interest and cash investments. Generally the exposures will be to non-investment grade corporate issuers, or sovereign bond issuers in emerging markets which may also carry emerging market currency risks. *See Glossary of key investment terms for an explanation about hedging. NEWCASTLE PERMANENT SUPERANNUATON PLAN SUPERANNUATION DIVISION 10

12 Asset class Defensive fixed interest and cash Description Fixed interest investments generally provide a regular income stream with the repayment of capital expected at the end of the term. These exposures are generally considered defensive as they are invested in highly rated sovereign bond issuers in developed markets or highly rated investment grade corporate issuers. Cash includes short-term interest bearing investments and fixed term interest bearing investments. GLOSSARY OF KEY INVESTMENT TERMS Active investment approach Managers of investment options with an active approach aim to perform better than the market overall. Asset allocation This refers to the allocation between the various asset classes (e.g. shares, fixed interest, property) of an investment option. It also includes the growth/defensive benchmark of the investment option. Benchmark and ranges The benchmark is the long-term asset allocation of the investment option. Factors such as the trustee s assessment of market valuations may cause the actual mix to vary from the benchmark, but it will generally stay within the asset allocation ranges. Consumer Price Index (CPI) CPI is a measure of the rate of inflation. In Australia, it s based on a selection of household goods and services. Enhanced Indexed investment options Investment managers with an enhanced indexed approach aim to perform slightly above the overall market for the applicable asset classes of the option. These options are mainly invested in indexed funds but with an actively managed component. Global Global generally means Australian and international. For example, investments may be made in Australian and international shares where an investment option invests in Global shares. Hedging Hedging generally refers to the process of protecting investments against, or reducing the risk of, a loss. For example, the value of international investments is affected by changes in the value of the Australian dollar. If the Australian dollar rises in value, then international investments reduce in value. Currency hedging is where investment managers use various techniques to minimise the effect of currency movements on international investments. Indexed investment approach Investment options with an indexed approach (sometimes called a passive approach) aim to perform in line with the overall market but may have some exposure to active management. Indexed investment options Investment managers with an indexed approach aim to perform in line with the overall market for the applicable asset classes of the option. Minimum suggested timeframe This is the minimum time for which you should consider holding your investment in an investment option. This is a guide only. NEWCASTLE PERMANENT SUPERANNUATON PLAN SUPERANNUATION DIVISION 11

13 Multi manager investment approach More than one specialist manager may be appointed to manage assets in each asset class, sector or investment style within the investment options. Objectives These identify the target return the option aims to achieve for investors. The objectives are sometimes stated in terms of a particular named index, e.g. the Reserve Bank of Australia cash rate (RBA Cash Rate), or a target that relates to CPI. Please note the objectives of any particular investment option should not be treated, or relied upon as a forecast, indicator or guarantee of any future returns or performance for that option. The value of investments may rise and fall, in any of the options. RBA Cash Rate The RBA Cash Rate is the rate of interest which the Reserve Bank of Australia (RBA) charges on overnight loans to commercial banks. Socially Responsible Investment approach Socially Responsible Investment involves making an investment decision based on principles of social responsibility in addition to the usual investment criteria. See Sustainable Investment for further details. NEWCASTLE PERMANENT SUPERANNUATON PLAN SUPERANNUATION DIVISION 12

14 INVESTMENT PHILOSPOHY AND APPROACH Investment objectives and strategy Each investment option has a specific performance objective. Our strategy generally is to select a long-term mix of investments to support the investment options objectives and we believe our investment options are reasonably likely to meet their objectives. However, there are no guarantees. We have included the investment objective and strategy in all investment options tables later in this Booklet. We may change the investment objective and strategy for each investment option to ensure that there is a reasonable probability we deliver on the objective. The actual asset allocation may fall outside the stated ranges during material transactions or due to factors including extreme market conditions or asset transitions. We will provide information about any significant changes to the features of our investment options. We use formal quarterly analysis to monitor the performance of investment options against their objectives and to help us assess whether we need to make any changes. Manager research and selection For the Diversified investment options, the Trustee has appointed Mercer Investments (Australia) Limited (MIAL) as an investment consultant. MIAL advises the trustee about the selection, appointment, replacement and ongoing evaluation of investment managers MIAL s significant scale in researching managers globally provides it with access to some of the best ideas from more than 5,000 investment managers around the world. How the Plan s Assets are invested Cash-type investment options The Cash-type investment options are invested with NPBS. Specifically, the Cash investment option is invested in interest bearing deposits with NPBS and the Term Deposit investment option is invested in term deposits with NPBS. If the NPBS was to wind up, then the deposits backing the Cash and Term Deposit investment options would rank equally with other NPBS deposits. As the underlying assets of these investment options are solely invested in deposits with NPBS, the security of money placed in these investment options is directly linked to the security and financial stability of NPBS. Diversified investment options The trustee invests the Plan s Diversified investment options: in funds managed by professional investment managers in a range of investments such as securities, derivatives and cash managed via mandates held with professional investment managers, and in funds managed by MIAL including but not limited to the Mercer Multi-Manager Funds (MMFs) or the Mercer Investment Funds (MIFs). The assets may also be invested in funds or investment vehicles managed by other Mercer related entities. MIAL is the responsible entity of the MMFs and MIFs and appoints professional investment managers to manage the assets of the MMFs and MIFs either directly or via external investment vehicles. The external investments for the Plan including the underlying investments of the MMFs and MIFs are generally held by an independent custodian. MIAL leverages its global research network to establish optimal combinations of specialist managers for each asset class. MIAL s investment manager research focuses on each manager s strength in idea generation, portfolio construction, implementation and business management. The Diversified investment options adopt a multimanager approach. This approach involves selecting optimal combinations of investment managers to achieve exposure to a range of investment management styles. The intention is to maximise the potential of the options to produce consistent performance throughout market cycles. The trustee may remove, replace, or appoint investment managers for the investment options at its discretion at any time. Information about investment managers is available on newcastlepermanent.superfacts.com. You can also call the Helpline for this information. NEWCASTLE PERMANENT SUPERANNUATON PLAN SUPERANNUATION DIVISION 13

15 INVESTMENT EARNINGS The Trustee has determined that it will not create investment fluctuation reserves and will generally distribute all investment earnings (after making provisions for tax, and allowing for investment expenses) to members. However, unallocated amounts can arise from time to time, for example due to cashflow timing issues and differences between tax provisions made and any tax paid. The investment performance of each investment option is not guaranteed by the trustee or NPBS and may be positive or negative. However, NPBS guarantees that the rate of return on the underlying deposits in which the Cash and Term Deposit investment options invest will not be negative, noting that this guarantee is directly linked to the security and financial stability of NPBS. Cash-type investment options For the Cash or Term Deposit investment options, your super account will be directly allocated with investment earnings at the Cash crediting rate, the Term Deposit crediting rate or the Term Deposit break crediting rate (as applicable). See later in this section for more information about How the term deposit investment option works. Cash crediting rate The Cash crediting rate (the rate of investment earnings allocated to the Cash investment option) is determined based on the actual earnings of the investment option after an allowance for investment tax and any investment management fees. The trustee declares the Cash crediting rate based on the returns earned on the underlying deposits held with NPBS, as declared by NPBS. The Cash crediting rate allocated to your account when you leave the Plan is calculated as described above for the period between the date your payment instructions are received by us and the date your benefit is paid. The Cash investment option is solely invested in interest bearing deposits with NPBS. The return on these deposits, which is declared by NPBS, is calculated based on the cash rate declared by the Reserve Bank of Australia (RBA). Term deposit crediting rate The crediting rate for the Term Deposit investment option (the rate of investment earnings allocated to the investment option upon completion of the term to maturity) is declared by the trustee based on the returns earned on the underlying deposits held with NPBS, and after the trustee makes an allowance for tax and fees. The Term Deposit investment option is solely invested in term deposits with NPBS. The return on these deposits, as declared by NPBS, is expected but not guaranteed to exceed the cash rate declared by the Reserve Bank of Australia (RBA). Refer to later in this Booklet for details regarding the crediting rate that will apply in the event of a break trigger event occurring. Diversified investment options For the Diversified investment options, investment earnings are applied to your super account via a unit pricing approach. Units explained The assets of each investment option are divided into units of equal value. Each time there is a contribution to the Plan, the trustee allocates units in the relevant option at the entry price. Similarly, when there are payments made, the trustee redeems units from the relevant investment option at the exit price. Payments include super payouts, fees, insurance premiums or tax. The entry price for contributions, rollovers or transfers will generally be calculated after your transaction is received and validated (which may be different to the last available unit price at the time of your transaction). The exit price used for super payouts, fees, premiums, tax and expenses is generally the price available at the time the relevant transaction is processed. Please note that: 1. We can only allocate units when we receive all the necessary information to invest; 2. We may suspend the issue (or redemption) of units whenever the trustee believes that the entry (or exit) price of the units cannot be calculated in a manner that is fair to all members holding those units. We may also suspend the redemption of units if we are unable to realise sufficient funds to satisfy a redemption request from the sale of the underlying assets; and 3. Units are not transferable. How unit prices are calculated The unit price of each investment option is generally calculated daily (except on weekends and Melbourne public holidays) although we may recalculate prices more or less frequently as appropriate. Unit prices may rise or fall depending on fluctuations in the underlying value of investments in each option. Unit prices are calculated to the fourth decimal place. Where the amount associated with the allocation or redemption of units does not exactly equal the amount received or to be paid, then we may issue or redeem a fractional unit equal to the outstanding proportion of a whole unit. A fractional unit has a value equal to the proportion that it bears to a whole unit. The net asset value of an investment option reflects the value of the underlying assets of that option less any liabilities, provisions for taxation and other expenses related to that option. The unit price of a whole unit (one unit), reflects the asset value of the investment option divided by the number of units on issue for that investment option at the relevant time. We make allowances for any transaction and operational costs (see 'Transactional and operational costs in Additional explanation of fees and costs section of this Booklet for more details). NEWCASTLE PERMANENT SUPERANNUATON PLAN SUPERANNUATION DIVISION 14

16 Unit pricing and changes to investment options If you change investment options, the unit price for the switch will generally be calculated after your request is received and validated (which may be different to the last available unit price at the time of your transaction). Differing returns Investment returns based on unit prices are likely to differ from the underlying manager s actual return due to differences in fees, timing and impact of transactional factors. How assets are valued Unless the trustee determines otherwise, the value of the underlying assets of the investment options will be based on market values determined by an external custodian or investment manager. Our unit prices can be independently verified using our valuation methods and policies. When valuing assets, we make an estimate of the tax liability due which has not yet been paid on investment income and capital gains, both realised and unrealised. USE OF DERIVATIVES Derivatives, such as futures or options, are investment products whose value is derived from one or more underlying assets. The value of a share option, for example, is linked to the value of the underlying share. The trustee does not undertake day-to-day management of derivative instruments. Derivatives may be used to assist in the efficient management of the portfolios (e.g. to quickly and effectively adjust asset class exposures and for rebalancing purposes) and to manage risk (e.g. for currency hedging). Losses from derivatives can occur (e.g. due to market movements). Derivative risk is managed by limiting derivative use in relevant Investment and or Transition Management Agreements with investment managers and by considering the risks and controls set out in the managers Derivative Risk Statements, where applicable. NEWCASTLE PERMANENT SUPERANNUATON PLAN SUPERANNUATION DIVISION 15

17 SUSTAINABLE INVESTMENT We build sustainability principles into the Diversified investment options to help protect and enhance the value of your super. We look beyond traditional financial factors to consider the potential investment impacts of corporate governance as well as environmental and social issues such as an aging population, energy and resource constraints and climate change. We believe Environmental, Social and Governance (ESG) factors may have a material impact on long-term risk and return outcomes. For more information refer to the trustee s Sustainable Investment Policy, available from newcastlepermanent.superfacts.com or by calling the Helpline. Principles of sustainable investment and good governance apply to all asset classes unless otherwise indicated. Active ownership and investment stewardship We also believe that principles of active ownership and investment stewardship are valuable in the investment process. For that reason, we have incorporated ESG considerations, principles of active ownership and investment stewardship throughout our investment decision making and ownership practices as documented in the trustee s policy on newcastlepermanent.superfacts.com Environmental, Social and Governance Considerations Investment managers are encouraged to consider relevant ESG factors (in the table below) when assessing investment risk and opportunities as relevant to the type of investments. Environmental Social Governance Climate change Health and safety Water Waste and pollution Biodiversity Labour standards(including the supply chain) Human rights and community impacts Demographics / consumption Board structure, diversity and independence Remuneration that is aligned with performance Accounting and audit quality Anti-bribery and corruption NEWCASTLE PERMANENT SUPERANNUATON PLAN SUPERANNUATION DIVISION 16